Smartline will merge with WA-based brokerage The Mortgage Gallery in a move the businesses say will provide scale in a tough market.
The franchise companies will look to merge by April 2012, with The Mortgage Gallery retaining its branding and management team. The Mortgage Gallery founder John Bignell told Australian BrokerNews the move will allow the company to compete amid tough market conditions in which scale is incredibly important.
"Everyone’s probably in recent times looked at their cost structure as we have done. There’s a requirement to continue to improve on technology capabilities as well. To us that was one of the major attractions to the Smartline brand; their undoubted ability in that area," Bignell said.
Bignell said The Mortgage Gallery had operated in a "unique position" which meant scale had become increasingly important.
"We felt we weren’t large enough to be considered one of the major players, but we were a little bit too big to be considered a boutique operator," he said.
Smartline is also set to benefit from the merger, Bignell said. With many aggregators and franchise brokerages targeting expansion in the WA market, Bignell said the merger will give Smartline a foothold which will deliver an edge on its competitors.
"The WA market is the most mature when it comes to mortgage broking. WA operators have a very strong footing in the state. It’s very difficult for an East Coast operator to come in and get established. The merger of our business to the existing Smartline business gives Smartline a substantial holding in the WA market and makes it difficult for other operators to break in," Bignell said.
The merger will yield a combined group with more than 240 franchisees, settlements of $4bn a year and a combined loan book of more than $17bn. Smartline managing director Chris Acret called the merger "a great fit".
"“Both groups share similar values and have a similar culture – a culture of helping each other, professionalism and a real client focus. Both companies have a franchise model with a commitment to helping their franchise owners succeed and grow," he said.